Tribunal rules in favor of appellant, deems completion certificate valid, dismisses interest claim, and finds 2017 notice time-barred.

The Tribunal ruled in favor of the appellant on all three issues. The completion certificate issued by Gram Panchayat was deemed valid as the High Court's quashing of the notification restored Gram Panchayat's jurisdiction, rendering the Show Cause Notice void. The Tribunal found that the appellant discharged the service tax liability upon receiving installments, negating the Department's claim for interest on late payments. Additionally, the Show Cause Notice issued in 2017 was deemed time-barred due to the absence of evidence of intent to evade tax. The appeal was allowed, and the original findings were set aside, with the judgment pronounced on 30.06.2021.

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Issues Involved:
1. Validity of the completion certificate dated 5.2.2013 issued by Gram Panchayat, Chota Bangarda.
2. Liability of the appellant to pay interest of Rs. 88,754/- on account of late payment of service tax.
3. Whether the Show Cause Notice is barred by time.

Issue-Wise Detailed Analysis:

Issue No. 1: Validity of the Completion Certificate
The appellant received permission to construct the residential complex from Gram Panchayat, Chota Bangarda, and obtained the completion certificate from the same authority. The Department argued that the area fell under the jurisdiction of Indore Municipal Corporation (IMC) as per a notification dated 5.2.2013. However, this notification was quashed by the High Court of Madhya Pradesh on 3.2.2014, thereby reinstating the jurisdiction of Gram Panchayat. The Tribunal held that the completion certificate issued by Gram Panchayat on 22.2.2013 was valid, as the notification was quashed retrospectively. Consequently, the Show Cause Notice issued in October 2017 was deemed void.

Issue No. 2: Liability to Pay Interest on Late Payment of Service Tax
The Department's claim for interest was based on the assertion that the service tax liability arose on the date of the sale deed. The Tribunal referred to Rule 3 of the Taxation Rules, 2011, which determines the point of taxation as either the time when the invoice is issued, the date of completion of service, or the date when an advance is received. The appellant issued receipts for installments as they were received and did not issue invoices. The Tribunal concluded that the service tax liability was discharged as and when installments were received, and there was no evidence of late payment. Therefore, the imposition of interest was not sustainable.

Issue No. 3: Whether the Show Cause Notice is Barred by Time
The appellant was regularly discharging the service tax liability upon receiving installments. The Tribunal found no evidence of fraud, collusion, willful misstatement, or suppression of facts by the appellant. Citing the case of CCE Vs. Renee Telepoint, the Tribunal held that penalties cannot be imposed under Section 78 of the Finance Act without evidence of intent to evade tax. Consequently, the Show Cause Notice issued in 2017 for demands from 2012 onwards was barred by time.

Conclusion:
The Tribunal decided all three issues in favor of the appellant, setting aside the findings of the Commissioner (Appeals). The appeal was allowed, and the adjudicating authority was found to have erred in its interpretation of the High Court's decision quashing the notification. The judgment was pronounced in court on 30.06.2021.

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